Australian Gross Domestic Product (GDP) grew 0.6% in the June quarter from March as the Australian economy continued to batter away the global recession. The New Zealand dollar fell slightly against the Australian dollar on the news, but remained above 81 AU cents shortly after. Update 1: By Thursday morning the NZ$ had fallen into the 80 Au cent range. The growth indicated an annualised rate of 2.4%, up from the annualised 1.5% growth in the March quarter. The result was above a median estimate of 0.2% quarterly growth in a Bloomberg survey of 20 economists, but below a 0.7% estimate from an AAP survey.
Yesterday, the Reserve Bank of Australia left its key interest rate at 3%, after expectations began to arise that the RBA will raise the rate as soon as October as the Australian economy strengthens. However, RBA Governor Glenn Stevens still seems to have left the door open regarding when he will raise the rate. This is in contrast to New Zealand's Official Cash Rate, which is at 2.5% and likely to remain at or below its current level if the Reserve Bank of New Zealand's 'low till late 2010' expectation eventuates and as the NZ economy gradually recovers from its worst recession in 30 years. However, the market has signalled its view that RBNZ Governor Alan Bollard may raise the rate sooner than this time-frame is up. For more on the Australian economy and interest rate movements and analysis across the Tasman, see our sister site, www.interestratenews.com.au
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